U faces stiff competition for state dollars, legislators say

By Mary Jo Frank

Michigan has a three- or four-year window of opportunity to bring its support of higher education up to a respectable level, before the states next economic downturn, predicts Sen. John J.H. Schwarz, R-Battle Creek.

Schwarz, chair of the Higher Education Subcommittee of the Senate Appropriations Committee, and Sen. Lana Pollack, D-Ann Arbor, joined economics Profs. Ned Gramlich and Paul Courant, and Gary Olson, director of the Michigan Senate Fiscal Agency, in a discussion about Michigans economy and the outlook for state support of higher education at last Thursdays Regents Meeting.

We should compete and we should compete hard in the good years for dollars for higher education, Pollack said. Our cause is worthy.

Major competitors for taxpayer support include the states corrections system, K-12 education and health care, according to the speakers.

State spending on corrections is up 343.6 percent, compared to an overall budget growth of 76.2 percent for the 10-year period beginning 198283, Olson reported. While corrections spending accounted for 3 percent of the states budget in 198283, it had grown to 7.5 percent by 199293.

The prison population has grown by 21,000 inmates or 145 percent over the past 10 years, compared with a 3.5 percent growth in the total Michigan population, Olson said. One out of four new prisoners is a drug offender.

During the past 10 years, the state has constructed 21 new regional prisons at a total cost of approximately $1 billion, for a capital cost of approximately $80,000 per new prison bed.

In contrast, the U-M has experienced a period of sustained erosion in state support for the last seven to eight years, President James J. Duderstadt said.

Pollack noted that state appropriations, as a percentage of the U-Ms General Fund, have declined from 76.9 percent in 1960 to 41 percent in 1993. In the meantime, student tuition, as a percentage of the General Fund, has increased from 21.7 percent in 1960 to more than 50 percent.

Regent Philip H. Power said that since the 1960s there has been a change in attitude toward higher education. Three decades ago the notion was that the state should subsidize education for students as a whole. This social obligation, he charged, has since been replaced by the idea that students should pay a users fee.

Over the past three fiscal years, the overall state general fund/general purpose budget has increased by 10.4 percent while higher education funding is up by 4.7 percent, Olson said.

Gov. John Englers 199495 budget recommends $1.25 billion for higher educationan overall increase of 3 percent for state universities, with individual increases ranging from 2.3 percent for nine of the states 15 universities, including the U-M, to 17.1 percent (Grand Valley State University).

Noting that the Regents have had to make the painful decision to increase tuition to maintain the U-Ms quality, Regent Nellie M. Varner asked the senators why the U-M is not slated to receive more than the flat percentage increase. Many U-M programs, she noted, are more expensive to offer than those offered by other state universities.

If it were possible, I would do it, Schwarz said. However, in 1994, in a climate where no university received any increase last year, the fairest thing to do is give each university something. He plans in 199596 to target appropriations to individual institutions, emphasizing his opposition to any formula funding for state universities.

Increased state support would come at a price, Pollack said. If the U-M received extraordinary support, legislators and taxpayers would expect restraint when it comes to tuition increases, she explained.

Tuition increases and concerns about the in-state/out-of-state ratio of students are the most sensitive constituent calls she receives regarding the U-M, said Pollack, who noted that since 1987 U-M tuition increases have risen considerably faster than the Consumer Price Index and the Higher Education Price Index.

She also reminded the Regents of the states recent very generous capital fund appropriation, crediting Schwarz for pushing for the funding.

Regent Paul W. Brown suggested that any tuition debate be centered on the quality of the education Michigan residents receive at the U-M compared with peer institutions nationwide. We provide a top-notch education for about one-quarter of the cost a Michigan resident would have to pay for any other [national peer] school. That differentiates the U-M from other state schools, Brown said.

Education is key to the states economic growth, Duderstadt said. In a knowledge-driven society, new jobs will be generated by new knowledge.

Gramlich said that while everyone knows of college graduates who are having difficulty finding employment, higher education still correlates with higher income.

Although Michigan is not a poor state, it no longer is a rich one, Courant explained. Fueled by the auto industry, Michigans per capita income was above the national average from the 1950s to the 1980s. Since 1987, the states per capita income has remained below the national average and is now more like the national average, Courant added.